Bloomberg analyst says Fed policy and bond yields struggle in 2022 could help Bitcoin price

Bloomberg analyst says Fed policy and bond yields struggle in 2022 could help Bitcoin price

Fed’s anticipated tightening of the bond-buying program and rate of interest hikes could current a macroeconomic surroundings prone to favour prime cryptocurrencies in 2022, in line with Bloomberg Intelligence’s senior commodity strategist Mike McGlone.

McGlone, writing in the December 2021 version of the Bloomberg Crypto Outlook report, believes deflationary forces in the market could present Bitcoin and different prime crypto property the impetus for recent momentum.

According to the analyst, cryptocurrencies exhibiting divergent energy versus equities as we transfer in the direction of the tip of the 12 months will doubtless proceed to outperform.

The bullish case for Bitcoin and Ethereum in 2022

McGlone’s bullish state of affairs for the benchmark cryptocurrency Bitcoin (BTC), and sensible contract platform Ethereum’s Ether (ETH), is printed in the Global Cryptocurrency Outlook report, in which he notes that China’s ban on crypto has arrange the sector for broader adoption in the US. He additionally believes the US could present a regulatory surroundings that helps the trade, with additional beneficial properties seen in price actions.

According to the analyst, the speedy progress witnessed round revolutionary crypto-related applied sciences like NFTs and crypto {dollars} could see a wider embrace in the US, developments prone to cement Bitcoin’s standing as a digital retailer of worth and see its worth rise even additional.

He factors out the US Federal Reserve’s outlook on inflation and the potential for market stress on bond yields as potential catalysts for central financial institution liquidity, and which in flip could see Bitcoin emerge because the “main beneficiary.”

McGlone says Bitcoin could discover itself in a “win-win” state of affairs if the inventory market drops on account of a reversal to the Fed’s anticipated tightening in 2022 occurs. He opines that BTC will doubtless run into headwinds ought to shares plummet, but when this state of affairs results in stress in the bond market, recent strikes in the direction of central-bank liquidity could mood beneficial properties in yields however profit crypto.

Some normalization in stock-market returns and a continued decline in US Treasury bond yields could shine on Bitcoin and Ethereum in portfolios,” the Bloomberg analyst wrote.

US Treasury yields have failed to interrupt above the two% threshold for almost 20 months, with 10-year yields declining beneath 1.50% final week regardless of a touch of an uptick after a three-day string of beneficial properties.

The failure to interrupt above 2% for the benchmark debt instrument comes “regardless of widespread consensus for increased yields,” and could be the primary pointer in the direction of a deflationary surroundings that may favour Bitcoin in 2022, in line with the analyst.

While the strategist states that an asset’s previous efficiency doesn’t essentially change into an indicator of its future outlook, any huge outperformance by a brand new asset class is all the time adopted by larger funding from earlier doubters.

It is this angle that could play out in 2022, with funding managers trying to keep away from the chance of lacking out by bolstering their portfolios with crypto allocations.

Bitcoin at present trades round $48,845, about 24% down in the previous 30 days and almost 30% down from its all-time peak above $69,000. However, the BTC price is nearly 160% up in the previous 12 months.



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